I'm an associate editor at Forbes, part of the team responsible for our signature issues: The Forbes 400, Global Billionaires and America's Richest Families. As a writer, I cover these wealthy business builders as well as other entrepreneurs. Before Forbes, I also reported on entrepreneurs for Inc. magazine and attended Syracuse University's S.I. Newhouse School of Public Communications.

Led By Billionaire Masayoshi Son, Softbank Will Buy Sprint Stake For $20B

President of Japan's mobile carrier Softbank Masayoshi Son speaks next to the CEO of the third largest mobile carrier in the US, Sprint Nextel's Dan Hesse, as they announce Softbank will acquire Sprint Nextel in Tokyo on October 15, 2012.

Softbank will pay $20.1 billion for a 70% stake in Sprint Nextel, expanding the overseas-growth opportunity for Japan’s third largest mobile-phone operator, the company run by billionaire Masayoshi Son.

The deal involves Softbank paying $12.1 billion to Sprint shareholders and $8 billion in new capital, Softbank says. This is believed to be the largest foreign acquisition by Japanese company in more than a decade.

Softbank stands to gain entrance to the U.S. market and capture the growth that’s largely disappeared from the oversaturated Japanese market. It’s an equally beneficial proposition for Sprint. Weighed down by more than $21 billion in debt, Sprint needs fresh capital to pay off its loans, make acquisitions and compete better with rivals like Verizon and AT&T. “This provides substantial flexibility and can result in reduced debt costs,” says Piper Jaffray analyst Christopher Larsen. “Any operational benefits are limited in our opinion, although there are some scale benefits to purchasing power.” Combined, Softbank and Sprint would boast more than 96 million users and rank as the world’s third-largest mobile-phone provider by sales.

Softbank will buy roughly 55% of existing Sprint shares for $7.30 a share, a 22% premium to Sprint’s closing price Friday. Sprint shares edged higher by 0.1% to $5.74 in U.S. pre-market trading. Softbank will fund the acquisition with cash and bridge financing, after ending June with $9.5 billion in cash.

Son, 55, the Softbank founder, is an ambitious entrepreneur who came of age and made a fortune during the heady Web valuations of the late 1990s. By the time the bubble burst in February 2000, Son was worth nearly $69 billion, a sum behind only men like Bill Gates. After his assets dwindled to only a hair more than $1 billion, by 2003, Son rallied his tech empire—investments scattered equally across startups and tech giants. FORBES estimated his wealth at $7.2 billion last March.

Sprint CEO Dan Hesse will keep his job, and appeared with Son to announce the deal in Japan earlier today. He joined Sprint in late 2007, and has only seen Sprint’s position slip further. The stock has lost nearly 70% in that time. Son has proven adept at breathing lift back into spent businesses, riving Vodafone Japan, Japan Telecom and Willcom, through aggressive pricing and marketing. “We would expect SoftBank to attempt to repeat this performance in the US,” says Barclays analyst James Ratcliffe. “As a result, we’d expect that Sprint, with a more robust financing position and SoftBank’s influence, to become a more robust competitor in the US market. While we’d expect near-term impact to be modest, and possibly positive—due to distraction at Sprint—for AT&T, Verizon and T-Mobile, we’d expect the deal to increase the competitiveness of the US wireless market in the longer term.”

While hardly in the same dire straights as Sprint, the past few years have challenged Softbank. The mobile-phone operator lost its highly lucrative position as the exclusive seller of Apple products in Japan—Son and Apple founder Steve Jobs were friends—when rival KDDI began selling iPhones; Softbank shares have fallen 8.5% in the past year. Acquiring Sprint may give it greater leverage with Apple, as well as spark other U.S. acquisitions. Japanese media has speculated that Metro PCS is likely an upcoming takeover target.

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